Activin and inhibin are important local modulators of theca cell steroidogenesis in the ovary. Using a serum-free primary theca cell culture system, this study investigated the effects of inhibin on theca cell androgen production and expression of steroidogenic enzymes. Androstenedione secretion from theca cells cultured in media containing activin, inhibin and follistatin was assessed by RIA over 144 h. Activin (1-100 ng/ml) suppressed androstenedione production. Inhibin (1-100 ng/ml) blocked the suppressive effects of added activin, but increased androstenedione production when added alone, suggesting it was blocking endogenous activin produced by theca cells. Addition of SB-431542 (activin receptor inhibitor) and follistatin (500 ng/ml) increased androstenedione production, supporting this concept. Infection of theca cells with adenoviruses expressing inhibitory Smad6 or 7 increased androstenedione secretion, confirming that the suppressive effects of activin required activation of the Smad2/3 pathway. Activin decreased the expression levels of steroidogenic acute regulatory protein (STAR), whereas STAR expression was increased by inhibin and SB-431542, alone and in combination. CYP11A was unaffected. The expression of CYP17 encoding 17α-hydroxylase was unaffected by activin but increased by inhibin and SB-431542, and when added in combination the effect was further enhanced. The expression of 3β-hydroxysteroid dehydrogenase (3β-HSD) was significantly decreased by activin, while inhibin alone and in combination with SB-431542 both potently increased the expression of 3β-HSD. In conclusion, activin suppressed theca cell androstenedione production by decreasing the expression of STAR and 3β-HSD. Inhibin and other blockers of activin action reversed this effect, supporting the concept that endogenous thecal activin modulates androgen production in theca cells.